Morphological diversity is often caused by altered gene expression of key developmental regulators. However, the precise developmental trajectories through which morphologies evolved remain poorly understood. It is also unclear to what degree genetic changes contributing to morphological divergence were fixed by natural selection. Here we investigate these problems in the context of evolutionary developmental transitions that produced the simple unlobed leaf of the model species Arabidopsis thaliana. We demonstrate that A. thaliana leaf shape likely derived from a more complex lobed ancestral state that persists in extant Arabidopsis species. We also show that evolution of the unlobed leaf form in A. thaliana involved loss of expression of the knotted1-like homeobox gene SHOOTMERISTEMLESS (STM) in leaves and that cis-regulatory divergence contributed to this process. Further, we provide evidence for a selective sweep at the A. thaliana STM locus, indicating that loss of STM expression in A. thaliana leaves may have been fixed by positive selection. In summary, our data provide key information as to when and how the characteristic leaf form of A. thaliana evolved.